The Bullard bounce: a retracement in the dollar due to comments from St. Louis chief James Bullard that pushed back expectations of an immediate 50 basis point July rate cut. Bullard said that although he is in favour of a 25 basis points insurance cut, a 50 basis point in July “would be overdone”. Bullard is considered to be the most dovish Federal Open Market Committee member after he was the sole backer of a 25 basis points rate cut during the latest FOMC meeting last week. This explains why the markets reacted strongly on his comments and futures market pricing of a 50 basis points rate cut fell from around 40% to around 20% for the next FOMC meeting in July.


Sterling fell victim to the broad US dollar strength yesterday, weakening overnight to reach further lows. The Confederation of British Industry released their latest Retail Sales survey, which showed a sharp drop, with the index tracking reported sales falling to -42, its lowest reading since 2009. The CBI survey has been a poor signal of actual retail sales recently and was based on a small sample of just 45 retailers, so the reading should be taken with a very large pinch of salt. Boris Johnson and Jeremy hunt will inflict a live-streamed “digital hustings” on Twitter and Facebook users tonight. The event will consist of a streamed Q&A session at 7pm with the public, not a direct debate. Hunt attacked Johnson for declining a Sky News debate by attempting to popularise #BoJoNoShow on Twitter last night.


“Under pressure” is what Queen and David Bowie sang in 1981, but applies very well to the status of the euro yesterday as well as the single currency had to give up ground against the dollar for the first time in five trading sessions. Yesterday’s French INSEE Business Sentiment shows that French manufacturing continues to remain remarkably resilient against the slowdown in global demand as it again came in above its long-run average level at 102 in June. An optimist will note how this shows domestic demand in the Eurozone remains sturdy, however, a pessimist may reply the contrast with German manufacturing shows how sensitive large parts of the Eurozone economy still are to swings in exporters sentiment.


The loonie rally is showing no signs of stopping despite the US dollar bouncing from recent lows yesterday. April’s Wholesale Sales report, which traces the trade of goods that are purchased and stored in large quantities and sold onto resellers and professional groups, hit the highest level since December 2016. The release reiterated the green shoots in the Canadian economy, which will be gauged in April’s GDP release on Friday. Further positive stimulus comes from the crude oil market, which has shot up to $58.90 at time of writing following the biggest draw in crude inventories since March, according to the API report.